How Pricing Strategies Increase Sales

Published on January 4, 2022
Written by
Filed under Selling Channels
Read time 8 Minutes

Giving your products competitive pricing strategies becomes a bigger task every day. Industries grow, new businesses come and go. This ever-growing list of competitors makes it harder to highlight what makes your products unique. You can build awareness through increased marketing efforts, social campaigns, and promotions. But if your pricing isn’t competitive, will anyone bite? There are a few simple ways to keep a competitive edge and still turn a good profit.

The $_9.99 effect

Since grade school, we’re taught to round numbers 4 or below down to the nearest 0, and to round 5 and above up to the nearest tenth. So why does the pricing strategy of pricing something at $79.99 work so much better than pricing it at $80? There’s never been a consensus behind why this pricing strategy works, it’s something that just works.

We can trace this pricing structure back to 1879, when James Ritty invented the cash register. Bosses noticed tills coming up short. So, prices shifted down from round numbers to a $9 or $0._9 model as a way to force cashiers to make change. So, perhaps it’s instead how we’ve been conditioned to see prices. ET Anderson has done extensive field experiments on the psychology of why this pricing structure works. Ultimately, this is a pricing structure that works best with newer products that customers are less familiar with.

This pricing model is especially effective for consumers that are more concerned with budgeting—such as younger and lower-income customers. It’s also an effective strategy for when purchasing multiple lower-costing items at the same time, such as a grocery store.

Additionally, these are situations when further dropping the amount after the decimal is useful. A price ending in $0.95 is typically used for markdown items. If something is reduced by 25%, it would likely go from $19.99 to $14.95. This is just a further visual cue retailers use to direct your eye to a deeper saving. Think of this as putting bigger discount brightly-colored sticker that retailers put over the standard price sticker. 

Don’t price too low

Using deeper discounts will move products, but it can also negatively impact your “bottom line.” Getting a discount is one thing, but narrowing your profit margins too low can the perceived quality of your products. Furthermore, it can cause your customers to expect lower prices all the time. It also makes the product appear to have a lesser value than other products. As in, you want your products to be seen as viable alternatives, not cheap knockoffs. Keep your pricing competitive with your competitors. Going too low can move products quickly, but it can also push you out of business. 

Should I offer free shipping?


Another impulse we as consumers have when shopping online is a demand for free shipping. Online sales still only accounted for 9% of all retail sales in 2017 ( So overall, our online shopping demands are shaped by those of our brick & mortar shopping habits. Apart from sales tax, we expect to pay the price we see. Adding on extra shipping fees in checkout can spook some customers.

Walker Sands reported in 2016, “(free) shipping continues to be the top incentive, with almost nine in 10 consumers reporting that free shipping would make them shop more online.” Other high demand logistical features, such as easier return and more same-day and next-day delivery, were also at the top of the list. So, as ecommerce continues to redefine how we ship items to customers, it will continue in an uphill battle to exceed or even meet customer demands.

Why not:

A major proponent of free shipping is eBay. eBay is in favor of its sellers offering free shipping because it makes for a larger Final Value Fee based on the checkout value on an order. So, if you sell a lot of lower priced items, this can actually cause your profits to significantly narrow.

Consider offering free shipping after a customer purchases a certain amount, such as “Free shipping over $75”. If you sell items with high profit margins that can ship in an envelope, etc. consider offering free shipping on them at a lower order totals, say $25.  

Which items benefit most from better pricing strategy?

Competitive pricing is a must if you sell items such as cell phone cases or screen protectors, as well as cosmetics, or pet supplies. The price is low, the margins are thin, and the competition is tough. You want your products to be competitive with the recommended/top selling items in your category. So pricing in the best range of turning a decent profit and still having a good enough price point to move units can be tricky. Luckily there are tools that can help you price your items.

Use StreetPricer for free with ShipStation

StreetPricer is a dynamic repricing tool that also gives reports on competitor analysis and price monitor. We’re excited to announce that all ShipStation users can sign up for a special free account through StreetPricer. Start developing a smarter pricing strategy on your top 10 products.

For more information on this integration and how to set it up, check out our partner page or our support article for setup info.

You can also visit StreetPricer directly for more information as well as see additional plan levels.

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Written by

James Messer

James Messer is a copywriter specializing in shipping, logistics, and ecommerce.

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